What happened

Shares of MongoDB (MDB 4.83%) charged sharply higher Thursday, surging as much as 6.4%. As of 1 p.m. ET, the stock was up 4%.

The catalyst that drove the database-as-a-service (DBaaS) provider higher was a partnership with Alphabet's Google Cloud to help developers build apps powered by artificial intelligence (AI).

So what

At the company's developer conference today, MongoDB revealed a deal with Google Cloud that will help developers tap into the vast opportunity represented by generative AI and hasten the creation of AI-infused applications. MongoDB and Google Cloud announced a "growing set of solutions and integrations" that will help developers harness the power of AI in creating their apps. 

The pair expanded an existing partnership that deeply integrates Google Cloud's Vertex AI and MongoDB's Atlas, allowing them to "build applications with AI-powered capabilities for highly personalized and engaging end-user experiences." Furthermore, recent advances in generative AI help automate the more repetitive aspects of code writing, reducing the amount of time it takes to build software applications from start to finish.

By partnering with Google Cloud, MongoDB brings its cutting-edge database technology to a much larger base of potential users, which could vastly increase its customer base.

The company revealed that Atlas -- its fully hosted database-as-a-service solution -- was adding a host of new features that "make it significantly faster and easier for customers to build modern applications." These include the use of generative AI to personalize features, the ability to integrate better search capabilities in apps, and improved data querying and workload isolation for Microsoft's Azure Cloud. 

Now what

A database is a key tool developers use when creating apps and MongoDB's cutting-edge, cloud-native platform is among the best. This was clear when the company released the results for its fiscal 2024 first quarter (ended April 30), the highlight of which was the most new customer additions in more than two years. This was fueled by the growing demand for AI.

The stock is far from cheap in terms of traditional valuation metrics, currently selling for 15 times next year's sales, when a reasonable price-to-sales ratio is between 1 and 2. However, given its strong history of robust growth and the growing demand for AI, the premium isn't surprising.